Thursday, July 11, 2013

Outlets at Hillsboro getting new events center

Wednesday, July 10, 2013 12:01 am | Updated: 1:10 am, Wed Jul 10, 2013. By MIKE COPELAND -

Hit hard by competition and recession, the Outlets at Hillsboro has gone from being a major draw to the community 
30 miles north of Waco to darkened shops that have caused its occupancy rate to plummet to 46 percent.

But the city of Hillsboro and Craig Realty Group, which owns the 360,000-square-foot center on Interstate 35, will collaborate to create the Hillsboro Events Center that is set to open in summer 2014. It will take shape in a building formerly used by the Gap store, which has relocated within the mall.

“We will have four outside courtyards to complement the Gap space,” said Jerry Barker, Hillsboro’s community development director.

When complete, the events center will host events ranging from trade shows and technology expos to wedding receptions, concerts and theater productions.

It is projected to generate revenue for the city and potential customers for the 30 stores still operating in the outlet mall.

Barker estimated it will cost $4.5 million to create a first-class events center, and the city and Craig Realty Group reportedly will split the bill.

The two sides continue to iron out details, Barker said, but Hillsboro likely will pay its share through a long-term lease with the owner.

The center will have the capacity to simultaneously host up to five events, with as many as 950 people attending.

Officials with Hillsboro and Craig Realty said creating the center is part of a package to make Outlets of Hillsboro more appealing.

A new northside entrance planned near Old Brandon Road will have a pad site for a sit-down restaurant, said Rob Snowden, property manager.

Clearance stores

Snowden said the mall also is repositioning itself as a haven for clearance stores as opposed to outlet stores. It has converted its longtime Nike Factory Store into a 15,000-square-foot Nike Clearance store. Under Armour Clearance House opened there two weeks ago.

The difference, Snowden said, is that outlet stores promise discounts of 35 to 65 percent off regular prices. Clearance store prices can reach 90 percent off.

“A visitor may find more product types, but the inventory is not as deep,” Snowden said. “Fashion items typically run a season behind.”

Opened in 1989, Outlets in Hillsboro was among the first outlet centers in Texas. It was expanded twice in the 1990s, as shoppers traveling I- 35 between Austin and the Dallas-Fort Worth Metroplex found it an inviting place to buy top-brand merchandise at discounted prices.

California-based Craig Realty Group bought the center in May 2007 and gave it a face-lift that included a new exterior paint job, landscaping and fresh signs.

During its heyday, more than 100 stores called the center home, “and I can remember when every space was filled,” Barker said.

Restaurants, hotels and other retailers flocked to Hillsboro, population 8,456, to take advantage of the phenomenon.

But recession and changes in attitude toward outlet centers eroded its popularity and short-circuited its growth.

“At one time, there was what we called ‘department store sensitivity,’ which meant the big names wanted their outlet stores 65 to 70 miles outside major metropolitan areas. They wanted them a day’s drive away,” Snowden said. “But over the years, that feeling began to fade.”

Other malls

Outlet malls clustered around the Dallas-Fort Worth area, with Grapevine Mills opening in 1997, Allen Premium Outlets in 2000 and Grand Prairie Outlets last year. Meanwhile, competition near Austin arrived in 2006 with the arrival of Round Rock Premium Outlets, which has grown to 125 stores.

Also among the competitors is what many consider the mecca of outlet malls in Texas: San Marcos Outlet Malls on I-35 south of Austin. More than
350 stores operate in two locations — Premium Outlets and Tanger Factory Outlet Center — spread across 
1 million square feet.

The outlet complex in Hillsboro began to hemorrhage, losing lessees to economic realities and hard times. Tenants such as Kay-Bee Toys; Mikasa, a maker of fine dinnerware; Oneida, which specialized in fine flatware; and Bombay Co., which sold home decor and furniture, discontinued store operations nationwide.
Key brands that remain include Polo, Reebok, Gymboree, Zales, Rue 21, Gap, Nike, Carter’s
Childrenswear, OshKosh b’gosh, Aeropostale and Bath & Body Works.

Lone Star Boot Outlet, which despite the name is not located in the outlet mall but nearby along I-35, has been selling boots and apparel for 24 years. Manager Sheila Ratcliff said it has endured ups and downs, but sales remain strong because of a loyal clientele that includes truckers traveling the interstate.

“If the outlet mall were full, I’m sure that would be a huge plus, but I can’t say our dips are due to what has happened there,” Ratcliff said. “The biggest damage was inflicted by the (Texas Department of Highways and Public Transportation) about 
10 years ago, when they made the access roads on each side of the interstate one-way. They had been two-way. Now if you miss your turn into the outlet mall or wherever, you have to loop around this entire area and find a way back.”

Ratcliff said if the outlet mall fills up with clearance stores offering up to 90 percent off, “they will have more business than they know what to do with.”
City’s economy

Despite the outlet mall’s struggles, Hillsboro’s economy has managed to hold its own, Barker said. The city enjoys a strategic location on I-35, just south of the split that takes northbound travelers, including truckers, to either Dallas or Fort Worth. Southbound traffic, meanwhile, merges as it arrives in Hillsboro.

The area has more than 500 hotel rooms, “and trucking-related companies are always kicking tires, looking for places to build,” Barker said.

Records from the State Comptroller’s Office show Hillsboro suffered a recession-related downturn in 2009, when gross sales, including retail, dropped to $393 million from $483 million the year before. But gross sales have steadily increased each year since then, hitting $490 million in 2012.

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